- GBP/USD holds positive ground around the mid-1.2600s amid the USD softness.
- BoE’s Broadbent said the central bank needs to see signs of clearer decline in inflation before it can conclude a downward trend.
- The markets anticipate potential rate cuts worth 75 basis points by the Fed in the second half of 2024.
The GBP/USD pair snaps its two-day losing streak during the early Asian session on Tuesday. The rebound of the pair is bolstered by the weaker US Dollar (USD) and the lower US Treasury bond yields. Investors await the UK inflation data, due on Wednesday. The annual CPI and Core CPI figures are estimated to show an increase of 4.4% YoY and 5.5% YoY in November, respectively. The major pair currently trades near 1.2653, up 0.05% on the day.
The Bank of England (BoE) left the interest unchanged at 5.25% for the third successive meeting while maintaining the view that the cost of borrowing needs to be restrictive for an extended period of time as inflation remains way above its target rate. The BoE Governor Andrew Bailey said that it’s premature to start speculating about cutting interest rates. He further stated that further interest rate hikes were also not ruled out, but we are at the top of the cycle.
Nonetheless, BoE policymaker Ben Broadbent has argued the monetary policy committee will need to see signs of a more protracted and clearer decline in inflation before it can safely conclude a downward trend is taking place.
On the other hand, the Federal Reserve (Fed) delivered a more dovish stance with the anticipation of potential rate cuts worth 75 basis points (bps) in the second half of 2024, whereas the BoE reiterated the tone that the rates should remain higher for longer. This, in turn, weighs on the US Dollar (USD) and creates a tailwind for the GBP/USD pair.
The US Building Permits and Housing Starts will be released on Tuesday. In the absence of economic data released from the UK docket on Tuesday, the GBP/USD pair remains at the mercy of the USD price. Market players will focus on November’s UK Consumer Price Index (CPI) and Producer Price Index (PPI) on Wednesday as well as the US Consumer Confidence (Dec) and Existing Home Sales.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 despite weak US employment data
EUR/USD loses its traction and declines toward 1.0850 after testing 1.0900 earlier in the session. Because Nonfarm Payrolls data for October missed the market expectation by a wide margin due to hurricanes and strikes, the US Dollar manages to hold its ground.
GBP/USD climbs above 1.2950, looks to end week little changed
GBP/USD benefits from the improving risk mood and trades in positive territory above 1.2950 in the American session on Friday as markets ignore the weak labor market data from the US. The pair remains on track to end the week flat.
Gold clings to small gains near $2,750 after US data
Gold clings to marginal recovery gains and trades slightly above $2,750. The 10-year US Treasury bond yield struggles to push higher after the dismal October jobs report and weaker-than-expected PMI data from the US, helping XAU/USD keep it footing.
Bitcoin Weekly Forecast: Run toward fresh all-time high hinges on US presidential election results
Bitcoin could experience a price pullback in the next few days ahead of the US presidential election, analysts say, an event that will be key to determining whether and how the crypto class will be regulated in the years to come.
Bank of Japan holds rates steady amid signs of modest GDP growth
Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.